Fighting a Medical Necessity Denial: Non-ERISA Policies

Health insurers, such as Anthem Blue Cross and Blue Shield of California, require medical necessity before providing coverage or preauthorization for any procedure, treatment or medical supply and can use medical necessity as a basis for denying any claim for coverage. Invariably, this has led many insurers to improperly deny claims on the basis of medical necessity. Sometimes such denials are the result of inadvertence or mistake, but in other situations, such denials can be an intentional attempt by insurers to avoid coverage for costly treatments.  Because such improper denials exist, it is important for you to understand how to fight a medical necessity denial in order to receive all of the coverage you are entitled to.

The framework for fighting a coverage denial due to lack of medical necessity changes depending upon whether an insured has an Employee Retirement Income Security Act (“ERISA”) or non-ERISA health insurance policy.  Generally, ERISA governs plans provided by employers, except plans provided by an employer who is a church or government entity, and does not govern plans that are purchased by individuals.  ERISA imposes a strict framework for challenging a denial for lack of medical necessity.  This article focuses solely on challenges that people with non-ERISA health insurance can bring to a medical necessity denial.

Filing an Internal Appeal

When an insurer issues a denial due to lack of medical necessity, you can file an appeal with the insurer itself.  The large health insurance companies such as Anthem Blue Cross and Blue Shield of California have very similar internet appeals process.  Written denial letters nearly always include information on how to start an internal appeal.  Usually, you will need to provide a letter written by either you or your doctor explaining why the denial was improper.  It is important to include as much detail and evidence possible in the appeal letter.  The letter should also include your name, claim number, and health insurance member number.  It can be helpful to contact an insurance lawyer such as the lawyers at the Law Offices of Scott Glovsky to help draft these appeal. These lawyers can help maximize the probability that an appeal will succeed.

You must file such an appeal within 180 days of receiving a denial notice.  Normally, insurers will determine the merits of an appeal to a preauthorization denial within 30 days and determine the merits of an appeal to a coverage denial within 60 days.  If you will suffer harm if the treatment sought is not provided immediately, you can seek an expedited appeal.  When you file an expedited appeal, the insurer has four business days to provide a decision which can be given to you verbally, but the insurer must then send a written notice of the decision within 48 hours.

Independent Medical Review (“IMR”)

If an insurer denies a claim for coverage or preauthorization, you can seek an independent medical review (“IMR”) from the appropriate state regulatory body.  An IMR is a free review of an insured by an independent medical professional to determine if a medical decision made by an insurance company was justified and reasonable. You can seek an IMR only if your insurance company denied, changed, or delayed a service or treatment because of a determination that the treatment or service was not “medically necessary,” the insurance company will not pay for an experimental or investigational treatment for a serious medical condition, or the insurance company refuses to pay for emergency or urgent medical services that you have already received.

In conducting an IMR, the independent medical professional relies upon a variety of sources like peer reviewed scientific and medical evidence, the standards for medical professionals that the national community of medical professionals recognize, and upon their own and others’ expert opinions. By looking to these sources of information, the independent medical professional attempts to discern which treatments are likely to be effective and which treatments are not.

There are two regulatory bodies that govern health insurance in California, the California Department of Managed Healthcare (“DMHC”) and the California Department of Insurance (“CDI”).  .  The DMHC governs all managed health care plans in California such as all of the plans provided by Kaiser.  The CDI governs insurance policies.  Once you have identified the correct regulatory body for your health insurance or plan, then you can seek an IMR from that body.

The DMHC website can be found at: http://www.dmhc.ca.gov/dmhc_consumer/pc/pc_forms.aspx. You can also call the DMHC at 1-888-466-2219. The website for the CDI is http://www.insurance.ca.gov/0100-consumers/0020-health-related/0010-consumer-provider-complaints/. The CDI can also be reached at 800-927-HELP (4357). Both the DHMC and CDI have detailed information for how to file a complaint for an external appeal but generally the information that you provide to them will mirror the information and documents you provided to the insurance company or health plan provider when you sought an internal appeal.  It is advisable to contact a health insurance lawyer such as a lawyer at the Law Offices of Scott Glovsky before submitting information for an IMR as a consultation can maximize your chances of success.

Once you have completed an IMR application you must send your written consent to the IMR program allowing the IMR medical professionals to obtain all necessary medical records. If the IMR application qualifies for an IMR review, then the CDI sends the case to an IMR organization and requests all necessary information from the insurance company. Once it receives the information, the IMR organization must complete its review within 30 days and issue its determination in writing to the insured, the insurance company and to the insurance commissioner. The written determinations will include in-depth findings and descriptions of the insured’s medical condition and important documents the IMR professionals relied upon.

If the IMR organization determines that the insurance company acted improperly, then the CDI or DMHC will issue a written decision compelling the insurance company to change its conduct.  This being said, if the IMR determination is adverse to you, then that would not preclude you from seeking relief for treatment which can still be “medically necessary” even if the IMR professional came to a contrary determination.

Seeking Legal Recourse

Another option for challenging a denial due to lack of medical necessity is to file a legal action in a court of law. This option is available before or after you seek an IMR.  A lawsuit can put immediate pressure on the insurance company or managed health care provider to reassess the denial and gives more credence to your position. Further, a lawsuit can result in complete coverage for the medical treatment sought, in addition to the possibility of additional monetary awards due to the insurance company’s or managed health care provider’s bad faith in denying the claim. Most lawyers specializing in bad faith health insurance coverage law take cases on a contingency basis, meaning that they do not charge any money to a client but instead take a percentage of any recovery. As a result, there is very little risk to you if you decide to raise a lawsuit.

If you are a California resident interested in pursuing a legal action or have any questions about your particular situation, contact the Law Offices of Scott Glovsky for a free consultation.  The lawyers at the Law Offices of Scott Glovsky are health insurance lawyers with bad faith experience serving California residents in Los Angeles, Pasadena, and the Inland Empire, including Claremont and Pomona.  They have fought and prevailed against the largest insurers including Anthem Blue Cross and Blue Shield of California.